Metals Bottomed Out in Overnight Trading, Global Banks Buying

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Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Well let’s get right to this week’s market action. And what a wild start to the week in the gold and silver markets it was.

Monday saw extraordinary swings in gold and silver prices. The metals sold off hard in trading in Asia and Europe, then surged in U.S. trading to post sizeable gains on the day. This spike down and then rebound higher was on extremely high volume, suggesting what is often referred to in the trading world as a key reversal.

Gold futures traded as low as $1,142 per ounce. But as of this Friday morning gold prices come in at $1,197 – off close to 1% on the day but still good enough for a weekly gain of 2.4% gain since last Friday’s close. Silver prices plunged all the way down to $14.15 an ounce at one point in overseas trading Monday, but they’ve since climbed back mightily. Silver now trades at $16.39, up 5.7% on the week and a whopping 16% since the low-point from Sunday night. Meanwhile, platinum is up 2.4% this week to trade at $1,230 an ounce, while palladium is off just less than 1% to $804 as of this Friday morning recording.

It’s not exactly clear what exactly drove these wild swings. The some disappointing news out of Switzerland surely had something to do with it. On Sunday, Swiss voters rejected the referendum to require Switzerland’s central bank to bolster its gold reserves. A “no” vote had been widely anticipated days in advance, but the final tally ended up being a blowout, with the “yes” vote garnering only 23% support. Then on Monday, Moody’s downgraded Japanese government debt. That sparked some safe-haven buying in precious metals and squeezed out some of the shorts.

In futures markets prices often gyrate for reasons completely unrelated to fundamental drivers. High-frequency traders and large commercial players who operate in the futures markets don’t care about fundamentals. They just care about seeing markets move in whatever direction happens to be favorable to them on any given day, hour, or even minute.

Amplifying market volatility can be profitable for those who are highly skilled at short-term trading. But most people who try to trade will be wiped out. Case in point: on Monday, the market washed out longs who had stop orders in place, then proceeded to surge before many people in the U.S. even woke up. The market seems to have a way of wringing out as many weak hands as possible and giving as few people as possible the opportunity to buy at major lows.

We now have in place what appears to be a wash-out spike low. Now there is always a risk that the lows for gold and silver will be re-tested. We may have to work through some more tax-loss selling as the year winds down. But the precious metals markets are setting up favorably for a recovery in 2015.

A lot will depend on when the U.S. dollar is finally ready to roll over. Over the past few months, the dollar has been the prime beneficiary of a free-falling Japanese yen and a declining euro.

Speaking of the euro, the European Central Bank met this week. ECB chief Mario Draghi said he’s making preparations for new stimulus measures but probably won’t announce any further steps until early next year. Some European Central Bank officials are calling for the bank to buy hard assets, including gold.

The Dutch central bank in November moved a fifth of its 612 metric tons in gold reserves from the Federal Reserve Bank of New York back home to Amsterdam. And France may soon make a similar move to repatriate its gold reserves. The leader of France’s largest opposition party, the National Front, called on the French central bank to take full possession of its gold held abroad and called for an independent audit of the country’s gold reserves.

Regardless of what governments and central banks do in the short run, we know that in the long run they will depreciate their currencies and that gold and silver will continue to stand as real money. It’s not too late to give the gift of real money this holiday season. Here at Money Metals Exchange we have products to fit every budget and every purpose – from low-cost copper rounds to freshly minted silver coins to stunning 10 oz gold bars. For most of the fall our silver products have been hot sellers. Low spot prices for silver have triggered heavy buying in silver Eagles to the point where the U.S. Mint couldn’t keep up with demand. But through it all we’ve successfully maintained product availability, avoided fulfillment delays, and kept premiums low for our customers.

Before we close today, I want to take a moment to alert all of our listeners of our free shipping special which runs until Christmas Eve. As long as you order $100 or more in precious metals, we will ship and insure your order at no cost to you. So don’t miss the opportunity to pick up some discounted gold and silver for yourself this month, but also consider giving out a few pieces of gold or silver to your loved ones -- a great symbolic gift of sound money. Do so, and we bet you’d spark some lively discussions during your holiday gatherings.

Well that will do it for this week’s Market Wrap Podcast, thanks for listening. This has been Mike Gleason with Money Metals Exchange reminding you that we remain fully committed to getting you the most value for depreciating dollar…with speed, with accuracy and with top notch service. Have a great weekend everybody.

Mike Gleason is a Director with Money Metals Exchange, a national precious metals dealer with over 50,000 customers. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.